nep-eff New Economics Papers
on Efficiency and Productivity
Issue of 2015‒06‒05
fourteen papers chosen by

  1. Is International Capital Tax Competition Fueled by the Quest for Increased Productivity? By Aras Zirgulis
  2. Assessing European competitiveness: the new CompNet microbased database By Lopez-Garcia, Paloma; di Mauro, Filippo
  3. Efficiency, Inefficiency and the MENA Frontier By Christopoulos, Dimitris; McAdam, Peter
  4. Assessing European firms' exports and productivity distributions: the CompNet trade module By Berthou, Antoine; Dhyne, Emmanuel; Bugamelli, Matteo; Cazacu, Ana-Maria; Demian, Calin-Vlad; Harasztosi, Péter; Lalinsky, Tibor; Meriküll, Jaanika; Oropallo, Filippo; Soares, Ana Cristina
  5. An empirical analysis of the manufacuring sector in vietnam during the periods 2000-2006 with a particular emphasis on technical efficiency, trade reforms ad workplace injuries By Dao, Le Thanh
  6. Comparing Micro-Evidence on Rent Sharing from Three Different Approaches By Sabien Dobbelaere; Jacques Mairesse
  7. A New Approach to Estimation of the R&D-Innovation-Productivity Relationship By Baum, Christopher F; Lööf, Hans; Nabavi, Pardis; Stephan, Andreas
  8. Immigration, Trade and Productivity in Services: Evidence from UK Firms By Gianmarco I. P. Ottaviano; Giovanni Peri; Greg C. Wright
  9. The UK's Productivity Puzzle By Alex Bryson; John Forth
  10. Homothetic Efficiency and Test Power: A Non-Parametric Approach By Jan Heufer; Per Hjertstrand
  11. Economies to Scale and the Importance of Human Capital in the Moulds Industry in Portugal: A Micro Panel Data Approach By Fátima Diniz; Elias Soukiazis
  12. Is the decomposition of the technical biased progress realizable with a Cobb-Douglas production function? By Georges Daw
  13. Interest rate elasticity of bank loans: The case for sector-specific capital requirements By Hense, Florian

  1. By: Aras Zirgulis (ISM University of Management and Economics)
    Abstract: In this paper we examine the relationship between capital tax competition amongst countries and the productivity spillover effects from foreign capital movements. The traditional theoretical literature regarding tax competition examines the phenomenon through analysis of the competition over tax revenue, which is generated by incoming capital. However, as the theoretical literature on FDI points to improving levels of productivity from managerial and technological spillovers, we investigate the question of whether governments also take into account productivity changes when competing over tax rates. We construct a two country, two firm model incorporating production functions which include productivity spillovers from foreign direct investment. According to our theoretical model, the larger the productivity spillovers from foreign capital, the more intense tax competition will be. We then empirically test this prediction using a spatial dynamic panel data model utilizing a dataset consisting of 42 countries spanning the years of 1998-2012. The empirical model employs system-GMM in order to overcome the endogeneity problem associated with the variables involved in the estimation. We find evidence that productivity levels are having a significant negative impact on tax rates as predicted by the model. Empirical testing is also performed with 21 European Union countries with similar results.
    Keywords: Tax Competition Foreign Direct Investment Productivity Spillovers
    JEL: A10 H23
    Date: 2014–10
  2. By: Lopez-Garcia, Paloma; di Mauro, Filippo
    Abstract: Drawing from confidential firm-level balance sheets for 17 European countries (13 Euro-Area), the paper documents the newly expanded database of cross-country comparable competitiveness-related indicators built by the Competitiveness Research Network (CompNet). The new database provides information on the distribution of labour productivity, TFP, ULC or size of firms in detailed 2-digit industries but also within broad macrosectors or considering the full economy. Most importantly, the expanded database includes detailed information on critical determinants of competitiveness such as the financial position of the firm, its exporting intensity, employment creation or price-cost margins. Both the distribution of all those variables, within each industry, but also their joint analysis with the productivity of the firm provides critical insights to both policy-makers and researchers regarding aggregate trends dynamics. The current database comprises 17 EU countries, with information for 56 industries, including both manufacturing and services, over the period 1995-2012. The paper aims at analysing the structure and characteristics of this novel database, pointing out a number of results that are relevant to study productivity developments and its drivers. For instance, by using covariances between productivity and employment the paper shows that the drop in employment which occurred during the recent crisis appears to have had “cleansing effects” on EU economies, as it seems to have accelerated resource reallocation towards the most productive firms, particularly in economies under stress. Lastly, this paper will be complemented by four forthcoming papers, each providing an in-depth description and methodological overview of each of the main groups of CompNet indicators (financial, trade-related, product and labour market). JEL Classification: L11, L25, D24, O4, O57
    Keywords: allocative efficiency, competitiveness, cross country analysis, firm-level data, productivity and size distribution, total factor productivity
    Date: 2015–03
  3. By: Christopoulos, Dimitris; McAdam, Peter
    Abstract: In a stochastic frontier setting, we examine technical efficiency in the Middle East and North Africa (MENA). Evidence suggests that in addition to economic indicators, political and social ones play a key role in development and frontier technical efficiency profiles. The MENA have been characterized by increasing economic efficiency over time but with marked polarization. The paper analyses and nest many key hypotheses in the literature e.g., the contributions of religion, of natural resources, demographic pressures, human capital etc. The originality of our contribution is the use of a large data set (including principal components), and extensive robustness checks. The paper should set a comprehensive benchmark and cross check for related studies of development technical efficiency. JEL Classification: C33, C38, C55, D24, E23, O11
    Keywords: development, frontier efficiency, MENA, stochastic frontier
    Date: 2015–02
  4. By: Berthou, Antoine; Dhyne, Emmanuel; Bugamelli, Matteo; Cazacu, Ana-Maria; Demian, Calin-Vlad; Harasztosi, Péter; Lalinsky, Tibor; Meriküll, Jaanika; Oropallo, Filippo; Soares, Ana Cristina
    Abstract: This paper provides a new cross-country evaluation of competitiveness, focusing on the linkages between productivity and export performance among European economies. We use the information compiled in the Trade module of CompNet to establish new stylized facts regarding the joint distributions of the firm-level exports performance and productivity in a panel of 15 countries, 23 manufacturing sectors during the 2000’s. We confirm that exporters are more productive than non-exporters. However, this productivity premium is rising with the export experience of firms, with permanent exporters being much more productive than starters. At the intensive margin, we show that both the level and the growth of firm-level exports rise with firm productivity, and that the bulk of aggregate exports in each country are made by a small number of highly productive firms. Finally, we show that during the crisis, the growth of exports by high productive firms sustained the current account adjustment of European “stressed” economies. This last result confirms that the shape of the productivity distribution within each country can have important consequences from the point of view of the dynamics of aggregate trade patterns. JEL Classification: F10, F14
    Keywords: firm heterogeneity, firm-level exports, productivity
    Date: 2015–05
  5. By: Dao, Le Thanh
    Abstract: This thesis investigates empirically the manufacturing sector in Vietnam during the period 2000-2006. The main objective is to provide a comprehensive analysis on the technical performance, and workplace safety of this sector. The analysis uses the sub-dataset for the manufacturing sector extracted from the annual Vietnam Enterprise Surveys for the period under consideration. Chapter one provides an overview of the economic renovation (commonly called Doi moi). The chapter reviews milestones in the Doi moi process and its consequences in terms of economic structural changes, trade, and investment. Chapter two describes the dataset used in the thesis and the construction of the key variables adopted in the subsequent chapters. Chapter three estimates technical efficiency in the Vietnam’s manufacturing sector. The chapter explores if, among other things, the estimates of technical efficiency obtained using the stochastic frontier approach are sensitive to the different distributional and econometric assumptions. Based on several test results, the chapter concludes that average manufacturing sector operated at 62 percent of its technical efficiency. Chapter four investigates empirically the determinants of technical efficiency in the Vietnam’s manufacturing sector using both mean and quantile regression approaches. Results suggested that types of ownership, feminization, and compliance of firms to labour market regulation are among important determinants of technical efficiency. Notably, there is a positive, albeit modest impact of trade liberalization on technical performance of the manufacturing sector and this impact is most pronounced for the least technically efficient firms. Chapter five focuses attention on workplace injuries in the manufacturing sector. As data on workplace injuries in Vietnam is very limited, a number of experiments was tried to find the most relevant estimation strategy. The chapter finally adopts a probit model and a simple OLS to inform determinants of workplace injuries. Results suggest that types of ownership and firm size are important factors that exert influences on workplace injuries reported. Interestingly, the foreign-invested sector was found to be the worst performer compared to the domestic counterparts in terms of technical efficiency and workplace safety. Drawing from these chapters, some policy conclusions, limitations of the current exercise, and outlines of possible agenda for future research in this area are discussed in the conclusion section.
  6. By: Sabien Dobbelaere (Faculty of Economics and Business Administration, VU University Amsterdam, the Netherlands); Jacques Mairesse (CREST (ParisTech-ENSAE), France, and Maastricht University, the Netherlands)
    Abstract: Empirical labor economists have resorted to estimating the responsiveness of workers' wages on firms' ability to pay to assess the extent to which employers share rents with their employees. This paper compares this labor economics approach with two other approaches that rely on standard micro production data only: the productivity approach for which estimates of the output elasticities of labor and materials and data on the respective revenue shares are needed and the accounting approach which boils down to directly computing the extent of rent sharing from firm accounting information. Using matched employer-employee data on 60,294 employees working in 9,849 firms over the period 1984-2001 in France, we quantify industry differences in rent-sharing parameters derived from the three approaches. We find a median absolute extent of rent sharing of about 0.30 using either the productivity or the accounting approach. Only exploiting firm-level information brings this median rent-sharing parameter down to 0.16 using the labor economics approach. Controlling for unobserved worker ability further reduces the median absolute extent of rent sharing to 0.08. Our analysis makes clear that the three different approaches face important trade-offs. Hence, empirical economists interested in establishing that profits are shared should select the appropriate approach based on the particular research question and on the data at hand.
    Keywords: Rent sharing; wage equation; production function; matched employer-employee data
    JEL: C23 D21 J31 J51
    Date: 2015–05–29
  7. By: Baum, Christopher F (Department of Economics, Boston College and Department of Macroeconomics, DIW Berlin); Lööf, Hans (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology); Nabavi, Pardis (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology); Stephan, Andreas (Jönkoping International Business School and Centre of Excellence for Science and Innovation Studies.)
    Abstract: We evaluate a Generalized Structural Equation Model (GSEM) approach to the estimation of the relationship between R&D, innovation and productivity that focuses on the potentially crucial heterogeneity across technology and knowledge levels. The model accounts for selectivity and handles the endogeneity of this relationship in a recursive framework. Employing a panel of Swedish firms observed in three consecutive Community Innovation Surveys, our maximum likelihood estimates show that many key channels of influence among the model's components differ meaningfully in their statistical significance and magnitude across sectors defined by different technology levels.
    Keywords: R&D; Innovation; Productivity; Generalized Structural Equation Model; Community Innovation Survey
    JEL: C23 L60 O32 O52
    Date: 2015–06–01
  8. By: Gianmarco I. P. Ottaviano; Giovanni Peri; Greg C. Wright
    Abstract: This paper explores the impact of immigrants on the imports, exports and productivity of service-producing firms in the U.K. Immigrants may substitute for imported intermediate inputs (offshore production) and they may impact the productivity of the firm as well as its export behavior. The first effect can be understood as the re-assignment of offshore productive tasks to immigrant workers. The second can be seen as a productivity or cost cutting effect due to immigration, and the third as the effect of immigrants on specific bilateral trade costs. We test the predictions of our model using differences in immigrant inflows across U.K. labor markets, instrumented with an enclave-based instrument that distinguishes between aggregate and bilateral immigration, as well as immigrant diversity. We find that immigrants increase overall productivity in service-producing firms, revealing a cost cutting impact on these firms. Immigrants also reduce the extent of country-specific offshoring, consistent with a reallocation of tasks and, finally, they increase country-specific exports, implying an important role in reducing communication and trade costs for services.
    Keywords: Immigration, services trade
    JEL: F16 F10 F22 F23
    Date: 2015–05
  9. By: Alex Bryson; John Forth
    Abstract: The 2008 Great Recession was notable in the UK for three things: the enormity of the output shock; the muted unemployment response; and the very slow rate of recovery. We review the literature which finds most of the decline in productivity is within sector and within firm before presenting new micro-analysis of workplace-level behaviour between 2004 and 2011 to gain insights into the processes that may have contributed to this aggregate picture. We find clear evidence of labour intensification but employers appeared incapable of turning this effort into improved workplace level productivity. Widespread pay freezes and cuts were often initiated in direct response to the recession. Workplace closure rates were little different to those experienced prior to the recession, but there is some evidence of a "cleansing" effect with poorer performing workplaces being more likely to close. There is some evidence of labour "hoarding", especially hoarding of high skilled labour: this h as had no discernible impact on the rate of innovation. There is no impact of recession on either the number of HRM practices workplaces invested in, nor their returns on those investments. There is no evidence that workplaces have benefitted from Britain's "flexible" labour market as indicated by using recruitment channels used by welfare recipients or the use of numerically flexible workers. On the contrary, workplaces with increasing unionisation appeared to benefit in terms of improved workplace performance
    Keywords: Productivity, recession
    JEL: D22 E22 E23 E24 J23 J24 J3
    Date: 2015–05
  10. By: Jan Heufer (Erasmus School of Economics, Erasmus University Rotterdam, the Netherlands); Per Hjertstrand (Research Institute of Industrial Economics (IFN), Sweden)
    Abstract: We provide a nonparametric revealed preference approach to demand analysis based on homothetic efficiency. Homotheticity is a useful restriction but data rarely satisfies testable conditions. To overcome this we provide a way to estimate homothetic efficiency of consumption choices. It generalises Heufer's (2013) two-dimensional concept to arbitrary dimensions and is motivated by a form of rationalisation similar to Halevy et al. (2012). The method allows to recover larger preferred and worse sets and provides considerably more preditive success and discriminatory power against random behaviour. An application to experimental and household expenditure data illustrates the potential of our approach.
    Keywords: Demand Theory; Efficiency; Experimental Economics; Homotheticity; Non-parametric Analysis; Revealed Preference; Utility Maximisation
    JEL: C14 D11 D12
    Date: 2015–05–29
  11. By: Fátima Diniz (Faculty of Economics, University of Coimbra, Portugal); Elias Soukiazis (Faculty of Economics, University of Coimbra and GEMF, Portugal)
    Abstract: The mould for plastics industry in Portugal is highly technological, innovative and modern, with a clear focus on exports. It is one of the most successful sectors in this country with high reputation in the world markets. The main aim of this study is to explain this success by detecting the main factors which determine the dynamic production structure of this industry and its transformation over time. Focus is given on the multiple aspects of human capital, such as work experience, learning by doing tendencies, innovation, dissemination of knowledge and business cooperation between companies that generate positive externalities in the production process. All these factors contribute significantly to explain the success this industry has achieved over the recent decades. A production function framework is employed in line with the neoclassical approach where human capital is the engine of growth as has been postulated by the endogenous growth theory. The production function is estimated by using unbalanced panel data and applied to a sample of firms operating in this industry, over the period 1987-2012. Our empirical evidence suggests that factors such as physical capital(cutting edge technology, including specific software) and quantitative as well as qualitative factors associated with human capital are the key factors explaining the production dynamics of the moulds industry in Portugal. Increasing returns to scale and human capital externalities are also identified as special characteristics in this sector.
    Keywords: Production function, economies to scale, human capital externalities, panel data, moulds industry.
    JEL: D24 D62 F43 I25
    Date: 2015–05
  12. By: Georges Daw (CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS)
    Abstract: The neo-classic exercise of growth economic accounting for a given country leads to a quantified diagnosis of the characteristics (capital, work, total productivity of the factors) of this growth while working with a function of Cobb-Douglas production. In the presence of biased technical progress (i.e. progress not profiting identically with all the productive factors), this function is not able to separately provide the value of each bias, which can disorientate the economic policy. In this paper, we provide theoretical and empirical details necessary in economics of technical progress and precisely on the subject of the technical biased progress. We show then exhaustively and pedagogically why the Cobb-Douglas function does not allow a separate identification of these bias and is condemned to gather them within the Solow residual.
    Abstract: L'exercice néoclassique de comptabilité de la croissance économique pour un pays donné aboutit à un diagnostic quantifié des caractéristiques (capital, travail, productivité globale des facteurs) de cette croissance en travaillant avec une fonction de production Cobb-Douglas. En présence de biais de progrès technique (c'est-à-dire de progrès ne bénéficiant pas identiquement à tous les facteurs productifs), cette fonction n'est pas en mesure de fournir séparément la valeur de chaque biais, ce qui peut désorienter la politique économique. Dans cet article, nous fournissons les précisions théoriques et empiriques nécessaires en matière d'économie du progrès technique et précisément sur le sujet des biais de progrès technique. Nous démontrons alors exhaustivement et pédagogiquement pourquoi la fonction Cobb-Douglas ne permet pas une identification séparée de ces biais et est condamnée à les regrouper au sein du résidu de Solow.
    Date: 2014–03–31
  13. By: Hense, Florian
    Abstract: Empirical credit demand analysis undertaken at the aggregate level obscures potential behavioral heterogeneity between various borrowing sectors. Looking at disaggregated data and analyzing bank loans to non-financial companies, to financial companies, to households for consumption and for house purchases separately with respect to a common set of macroeconomic determinants may facilitate more accurate empirical relationships and more reliable insights for economic policy. Using quarterly Euro area panel data between 2003 and 2013, empirical evidence for heterogeneity in borrowing behavior across sectors and the credit cycle with respect to interest rates, output and house prices is found. The results motivate sector-specific, counter-cyclical capital requirements.
    Keywords: bank loans,disaggregation,interest rate elasticity,macro-prudential tools
    JEL: E44 E51 E52
    Date: 2015
  14. By: Natasa Stojkoviæ-Krstiæ (Banka Poštanska štedionica, a.d., Beograd)
    Abstract: The integrating business performance measurement system in the enterprise has the important role of development and guidance, giving the basis for formulating and guiding the corporate strategy. Relevance of the integrating business performance measurement system, that is, application of the performance measurement process at the different levels of activities and business dimensions includes the motivation role, since it stimulates higher objectives realization. The integrating business performance measurement system seems to be the basis for creating compensation system for managers and other employees. Relevance of the cited functions of integrating business performance measurement system requires the need for higher management initiation, considering its designing, implementation, and continual development and improvement.
    Keywords: measurement, performance, organization
    JEL: M11 M21 O31
    Date: 2014–10

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